Reduce Supply Chain Excess

Supply chain excess – it costs!

Supply chain excess estimates range from $100 billion to over $1.5 trillion depending on the geographical region and various product categories. With new environmental restrictions being introduced by state and federal governments it is no longer feasible, or affordable, to procrastinate on reducing supply chain waste. While there may be some initial costs, green supply chains consume significantly less energy in manufacturing, transporting and warehousing vastly saving money in the long run.

Packaging sustainability – repackage, recycle

First, begin with examining all product designs. Where can material expenditures be reduced? Are there more energy efficient savings? What about different product packaging options?

Secondly, examine raw materials waste. Can any materials be recycled, or redesigned and be reused? With how technology has progressed a lot of waste, which was previously discarded, can now be recycled.

Reduce supply chain waste

Is there a way to efficiently decrease excess inventory? Certainly the internet and globalization have made it much easier in finding buyers for consumer products. But at the end of the day, a large volume of excess inventory indicates that the end-to-end supply chain remains largely inefficient.

It’s virtually impossible to completely eliminate all excess inventory, however, it can be substantially reduced by engaging with more efficient supply chain practices. By ensuring the best quantity of supply exists in the supply chain, while also building with quality products, a significant reduction will happen.

Implementation of waste minimizing programs have been successful in improving company products and reducing overhead costs. For example, Microsoft recently renovated their Redmond, Wash., campus with stellar energy efficient results. Through a combined effort of energy management, alarm management and fault detection, Microsoft expects to save more than $1 million per year in energy costs, with a payback of less than 18 months. In a statement released by Microsoft’s Chief Environmental Strategist:

“What we learned confirmed our hypothesis: Microsoft (and by extension, many organizations with similar real estate portfolios) don’t need to undertake capital-intensive retrofits to cut building energy costs. Instead, we saw buildings become dramatically more efficient by introducing software to harness and utilize the building systems already in use. By integrating powerful analytics that add intelligence to existing building infrastructure, our buildings got smarter, more efficient and less costly to operate.”

In all, waste reduction increases the quantity of finished goods that will pass quality green standards, while also, minimizing the waste of raw materials.

Key Questions to Ask SCM Vendors

Think of it as two phases for your company.

Phase One: Supply chain evaluation

20/20 hindsight can be a horrible headache. How many times have each us said, “If I knew back then what I know now, I would have done this differently.” This can be no different when choosing SCM software. Strategic planning, thorough research, and handling critical questions will save you from future “shoulda, coulda” woes. In fact, a comprehensive assessment of your own company’s supply chain should be first priority before initiating SCM vendor talks. Here is a list to keep in mind while evaluating:

  1. Have you conducted a comprehensive assessment of existing businesses? Do you have a legitimate need for SCM software at this time?
  2. What is your overall objective?
  3. Do you have a selection committee in place? Are members from across different departments (top management, consultant, suppliers)?
  4. Have you identified specific requirements you want in your SCM software?
  5. Can you justify an investment which may not see a ROI for over a year? Are there any government grants your company will qualify for to help offset costs?
  6. How much change can your company make?
  7. How will you support and maintain new technology?

The more initial information gathered, the better the results when implementing SCM software.

Phase Two: How will this work for my company?

With a plan in mind, start vendor searching! Ultimately, you want a complete SCM system, which will intelligently integrate with your established CRM. This is the time to ask hard-hitting SCM software questions. Here is a small list of example questions:

A) Clarifying communication:

  • How would the SCM software work with your customer relationship management (CRM) system?
  • How would your business, IT and SCM software strategies all fit together?
  • Ask to speak with other vendor clients or customers. How has the SCM software worked for them?

B) Getting the service and support you need, even long term:

  • What type of flexibility and reliability do you offer?
  • Do you have a future road map that will help my company grow?
  • Could you list the top few supply chain performance improvement initiatives over the next couple of years?
  • What kind of training is required for program managers?
  • What is the learning curve for SCM software?
  • Can this SCM system handle my company’s long term goals?

C) Maintaining your system:

  • Is the system difficult to maintain?
  • Is there a lot of downtime with the system?
  • What are your supply chain performance improvements initiatives for the following years?

Hopefully, these questions will give you a starting point to implement a thoughtful research strategy. Asking key questions will help you chose the best SCM software for your company, and avoid any long term regrets.

Social Supply Chains

Social media in the B2B capacity

In case you’ve been living under a rock, social media has completely changed eCommerce on a global scale. For the average consumer, its become second nature to follow trends online and searching for the best deals. Social media has certainly thrived in a business-to-consumer (B2C) setting, as online retail giants Amazon and Overstock.com can attest. But will social media survive in a business-to-business (B2B) capacity? Will this strengthen supply chains?

Social media with B2B might predict future inventory needs

A recent example of social supply chain involves global retail giant Walmart. After acquiring Kosmix, a social media platform, Walmart plans to devise and develop social, and mobile, networking capabilities within their supply chain. Kosmix, now renamed WalmartLabs, hopes to enhance Walmart’s communicative collaborations with customers, suppliers, and logistic service providers.

“Social networking and mobile applications are increasingly becoming a part of our customers’ day-to-day lives globally, influencing how they think about shopping, both online and in retail stores,” said Mr. Castro-Wright, Vice Chairman for Walmart, in a statement.

Anand Rajaraman, co-founder of Kosmix, said in the Walmart statement: “Our work has focused on developing a social genome platform that captures the connections between people, places, topics, products and events as expressed through social media.”

So, what does that mean? Simply stated, introducing social media in the supply chain puts people, not documents, in the middle. Facilitating a social supply chain environment allows intuitive growth, design and flow. According to Mr. Rajaraman, social media can even predict customer demands, which helps determine what new products should be added to different stores, “We’re analyzing social information for the neighborhood area of each store,” he said. “How should the interests of a community influence the assortment in the store?”

Here is one example. Perhaps after investigating your data you find an increase of social activity pertaining to “hiking boots” resulted in increased buying activity during fall, but primarily on the East Coast. This saves the company time and money during the following season.

Is it the next step?

Realistically, social supply chain is the next step of eCommerce development. Indeed, as Facebook and Google+ connect personal social circles, social media within the B2B environment creates enterprise collaboration with suppliers. B2B software companies, like Moxie Software and Yammer, can harness how people down the supply chain communicate and collaborate with one another, or improve how companies analyze real-time information to help make smart business decisions. The end goal enables an efficient, money-saving social supply chain.

Green Supply Chain: Changing the Corporate World while Saving the Environment

Our world is currently undergoing major environmental change-researchers claim that the extreme weather occurring of late is caused by our lack of concern for the Earth. We tend to take our resources for granted considering the growing world population, resulting in resource depletion. Legislation enforcing stricter environmental regulations will soon be passed in America. The concern for environmental issues has also caught the eye of the corporate world. Companies are quickly realizing that green supply chains will help them reduce costs while helping save the environment.

Green Supply Chain: What is it, and Why use it?

A green supply chain is the process of using and transforming environmentally friendly inputs through change agents, whose byproducts can be used to improve the environment, or be recycled. Companies in the corporate world are realizing that using a green supply chain can be a competitive advantage in the marketplace; they are coming up with innovative solutions for which a green supply chain will help them save money and help the environment. For example, some companies are focusing on indirect purchases to help prevent environmental issues. Reducing the amount of cardboard used for packaging, and creating “smart packages” will help the company save money, and contribute to the environmental cause. Another way sustainability can be profitable is through the organic food craze- grocery stores charge high prices, and make a large profit off organic food that consumers are willing to pay much extra for. The green supply chain phenomenon also gives rise to a new industry- companies specializing in sustainability training and certification.

Real World Examples

The concept of the green supply chain has already spread to several Fortune 500 companies. General Motors (GM) reduced disposal costs by $12 million by establishing a reusable container program with its suppliers. PG&E has also been supporting green supply chain efforts- it gave its first Green Supply Chain award to Southwire Company. Southwire Company converted 1/3 of its cars to hybrids, thereby reducing landfill waste by 27%. It also eliminated lead activities from its products. Walmart has also begun implementing the green supply chain, and has seen an increase in profits by 7% ever since.

Inmar: Leader in Reverse Logistics Solutions

Interested in reducing your company’s rate of returns and improving trading partner relations while displaying a commitment to customer satisfaction and the environment? If so, implement reverse logistics solutions for your company today. Reverse logistics solutions can benefit your company greatly, and provide valuable data that can better its future functioning. Inmar Reverse Logistics, a company specializing in reverse logistics solutions for over 30 years, guarantees that by using its reverse logistics solutions, your company will receive maximum value.

Types of Reverse Logistics Solutions that Inmar Offers

1) Returns Management: A reverse logistics solution that monitors the reverse logistics process from the initial return authorization to final disposition. This includes facility management, financial management, processing of all physical returns, etc.
2) Asset Recovery: Maximizing the value/revenue of the overstocked, obsolete, surplus products while taking into consideration the brand value.
3) Re-Marketing: A solution that calculates the maximum value from the returned product, and conducts re-marketing strategies, such as refurbishing or repacking, accordingly.
4) Supply Chain Consulting and Analysis: This reverse logistics solution focuses on ensuring the efficient removal of waste, while minimizing loss and risk. This is done through detailed analysis of your company’s supply chain processes.
5) Recall Management: Focuses on liability issues, product reliability and payment, consumer safety, and brand image recovery/management.

Reverse Logistics Solutions Excellence

A leader in providing reverse logistics solutions, Inmar received the Reverse Logistics Operational Excellence Award from the Reverse Logistics Association in March 2011. Inmar won this award due to its exceptional work for their client, ADT. Inmar Reverse Logistics provides technology-driven reverse logistics solutions to a client base of over 300. Their clientele base is spread over a variety of diverse markets, including Toys, Consumer Goods, Footwear and Apparel, Pharmaceutical Companies, etc. Other successful companies specializing in unique reverse logistics solutions include GENCO and ModusLink.com Global Solutions. GENCO’s reverse logistics solutions focus on managing the complete returns management process for its customers throughout the whole of North America, while ModlusLink Global Solutions focuses on integrated returns management, repair, and asset disposition solutions.

Reverse Logistics Process: How to Increase Profits by Sending Products Back

Though supply chain logistics has been the primary focus, an increasing number of companies are discovering the great deal of money that can be made in looking the opposite way, and sending things back. Reverse logistics is a rapidly advancing concept in today’s business world, as Third Party Logistics Providers (3PLs) discovered that up to 7% of an enterprise’s gross sales can be captured by return costs through the reverse logistics process.

What is the Reverse Logistics Process?

In a nutshell, the reverse logistics process is that of removing new or used products from their initial place in the supply chain; this occurs when customers return products, and when there is overstocked inventory or outdated merchandise. The products are then redistributed from the point of consumption to the point of origin, in order to recapture product value. The ultimate goal of the reverse logistics process is to maximize value, or achieve proper disposal of the product to the satisfaction of the customer or consumer, as customer satisfaction is the number one priority.

How does it Work?

The detailed reverse logistics process differs based on the company’s unique products and policies. According to Chuck Poirier of the Computer Sciences Corporation, the reverse logistics process can be broadly outlined in five points:

1)      Reconditioning- when a product is cleaned, repaired, and restored to a “like new” state.

2)      Refurbishing- a more detailed form of reconditioning, particularly in repairs.

3)      Remanufacturing- Requires disassembling and reassembling the product entirely.

4)      Resell- when the reconditioned, refurbished, or remanufactured product is sold again as new.

5)      Recycle- when a product is reduced to its basic elements, which are reused.

A Booming Industry’s Success Stories

The concept of reverse logistics has created the new industry of Third Party Logistics Providers (3PLs), which specialize in reverse logistics applications, customized to fit the size and type of any client’s company. One such company is Unyson, which manages returned/damaged products for clients. They conduct the reverse logistics process by entering the items into a custom built Web-based communication and transportation network, which allows them access to track shipments in transit in an organized fashion, and ensure that they return to a return center for reconstitution or disposal. Companies that benefit from such services include Bed, Bath & Beyond- which, thanks to reverse logistics processing, can provide their customers a no questions asked return policy, resulting in greater customer satisfaction.

Gulf Air Selects Supply Chain Solution from AAR and Gulf Technics

The national carrier of the Kingdom of Bahrain, Gulf Air has recently announced a partnership between AAR and Gulf Technics to provide Gulf Air with an integrated supply chain and component repair solution. The five-year program began in April 2011.

The partnership between AAR and Gulf Technics will combine parts supply, distribution, component repair, information technology, and logistics capabilities to help Gulf Air cost-effectively and more safely operate its Airbus fleet.

AAR and Gulf Technics will manage the rotable components supply chain for 14 A320s, 10 A330s and four A340 aircrafts. In addition to the rotable program, the two partners are exploring a joint supply chain and component repair capability.

This joint supply chain and component repair capacity was outlined in an LOA and signed by both AAR and Gulf Technics in March 2011.

Division President, AAR Allen Asset Management, John Holmes says the program builds upon the excellent relationship AAR and GT have established with Gulf Air in support of their operations and will leverage their extensive planning.

Holmes added that as they focus on executing the program, they are also working closely with GT to develop a joint supply chain and component repair capability to serve Gulf Air, as well as other Airbus operators in the Middle East and North Africa.

GT is just as excited by this achievement as they strive to provide a fantastic program for Gulf Air and Bahrain. The partnership with AAR will bring direct benefits to Gulf Air, as well as to the economy and technical sector in Bahrain, says Ahmed Elnenaey of GT.

Elnenaey is the Head of Research and Business development for GT, and he adds that the program is only the launch pad for a greater endeavor to establish a competitive aviation asset management hub in Bahrain.

Supply Chain Merger Evolves as Glen Road Systems and Invata Intralogistics Announce Agreement

GRSI and Invata Intralogistics, Inc. have merged their two companies to further benefit their already 10-year long working relationship in hopes to achieve synergies and benefits from their partnership.

GRSI is a global provider of supply chain execution software, distribution center automation and system integration. Invata Intralogistics, Inc. is a global supplier of supply chain optimization, facilities integration, software and controls.

The two conducted thorough research into the needs of the marketplace in preparation for their merger. Results of the study were a key factor in the unanimous agreement by both company directors to conclude in this merger agreement.

Many supply chain and C-level leaders across a broad range of target markets were interviewed about their attitudes and experiences related to large asset-based system integrators, those with in-house supply chain software and controls and dealer channel integrators, as well.

CEO of GRSI, Steve Martyn, says their approach to managing inventory in motion is essential as companies implement more sophisticated automation projects. Martyn also notes that traditional WMS suppliers are simply too removed from these sophisticated devices to manage them efficiently or cost-effectively.

Invata is a system integrator with in-house software products and services, in addition to its focus on logistics network optimization. CEO, Ryan Sheehan, says the company views the market through a different lens than typical integrators as they approach the market with a focus on inventory, transportation, infrastructure and labor. The company is able to invest in the best people and technology to meet the needs of their clients.

GRSI is the developer of FastTrak WM+, a warehouse management suite that seamlessly integrates traditional WMS functionality with a Warehouse Control System, Order Management System and Packaging Integration applications.

Supply Chain Examined for Gasoline Costs

An Energy Information Administration study was done a few years ago and remains relevant today with its results. In their weekly report, they highlighted how crude prices work their way through the system in about eight weeks.

Usually, it takes only two weeks for the pump prices to increase and analysts say that for every $10 bbl increase in the price of crude it will usually translate to a 24 cent increase in the per gallon cost of gasoline.

The report showed a 0.5 cents decline in the U.S. retail gas price average for regular grade as of March 21, but at $3.562 gallon, that is little consolation for American drivers.

Likely, the average will again move higher after this brief pit stop due to the fact that wholesale costs are still moving through the supply chain.

In recent weeks, wholesale gasoline costs moved higher across the country, climbing alongside the advance by crude features. Weekly data released on March 23 by the EIA showed a sharp increase in implied demand and big drop in domestic supply levels.

The EIA shows there is increased demand and data shows a year-on-year growth through March 18 at 0.8% higher than that comparable to 2010. The data further shows acceleration in that growth, up 1.2% from a year ago.

However, what really caught the market’s attention was a steep 5.3 million barrel drawdown in U.S. commercial gasoline inventory. The drop is 2.2 percent less than a year ago at this time.

Gasoline stocks have fallen to 21.4 million a barrel or 8.9 percent from a 21-year high registered on Feb. 11th of this year and are now near the five-year average.

Historically, gasoline prices move higher from winter into spring as the market anticipates increased demand as the weather warms so this will be a factor to watch.

Supply Chain Management Providers Enjoy Boost in Sales

Two recent reports show that supply chain management software grew in this first quarter of the year. Manufacturers and other businesses bought the software in growing numbers as an upstart economy freed up budget dollars for improvement initiatives.

The two recent reports were from Supply Chain Management and ERP vendors and in them JDA Software reported revenue for the fourth quarter ending Dec. 31, 2010 of $168.8 million. That far exceeds the $107.1 million it took in for the fourth quarter of 2009.

The 58 percent increase in revenue from JDA’s supply chain management products and services came mainly at the hand of its i2 Technologies’ subsidiary. They have long been a rival in the supply chain management software market until JDA acquired them in 2010.

JDA still managed to improve its supply chain management and related sales by 6 percent over the final quarter of 2009, even stripped of the i2 boost. They took in $113.9 million in revenue in the final quarter of 2009.

In announcing all of the recent results, JDA also said that it intends to grow its presence in the supply chain management market, expecting double-digit sales growth each year on its way to becoming a billion dollar company.

Total revenue in 2010 was $617.2 million for JDA and they continue to predict strong demand for supply chain management products in 2011.

On a smaller scale, CDC Software indicated that buyers in the fourth quarter purchased one of its supply chain management packages in greater numbers. CDC Software is an ERP and supply chain management provider also.

Previewing its fourth-quarter results, CDC said its TradeBeam global trade management offerings demonstrated solid growth in sales during the fourth quarter of 2010 but did not divulge the full results.